The Real Question: WHY Don’t People Make Enough To Pay Income Taxes?

Mitt Romney was caught on video complaining that 47% of us don’t make enough to pay taxes, believe they are victims, are dependent on government, etc. The right question is why do so many of us make so little?

Moving Jobs To Places Where People Don’t Have A Say

You often hear that competition due to “globalization” means that we have to accept lower wages and fewer benefits, because people “over there” make so much less. What has caused the pressure, however, is “free trade” agreements that allow companies here to close factories here and open them over there, and then bring the same things they used to make here to sell in the same stores. The only “trade” involved in this transaction is trading who does the work.

In places where people are able to have a say, they say they want better wages, benefits, good schools, good roads, parks, a clean environment, safety standards, and things like that. In places where people do not have a say, they are told they can’t have better wages, benefits, good schools, good roads, parks, a clean environment, safety standards, and things like that.

When we allow our companies to close factories here, where people have a say and move them there, where people do not have a say, and then bring the same goods back here to sell, we are allowing them to escape the borders of democracy. When they are no longer subject to the We, the People that has a say, they can do what they want, exploit workers, exploit the environment, and reap the profits of not having responsibilities to others. And because it costs less to pay people less and exploit the environment, allowing them to escape these responsibilities makes democracy a competitive disadvantage.

The Wal-Martization Of Our Economy

Another reason so many people don’t make enough wages to pay taxes is because we let companies like Wal-Mart and Staples pay close to minimum wage. That is part of how they compete with our smaller, local businesses. Low wages, selling cheap stuff made in China by people with lower wages. (And by the way, we don’t raise the minimum wage to a livable level! This means that government ends up helping employees of these companies through “safety-net” programs like Medicaid, Food Stamps, and the other “dependency” programs Romney complains about.)

Also, bigger companies are able to use their size. They can also apply the advantages of access to capital that smaller, local companies and regional chains cannot. They can also take advantage of scale in their purchasing, negotiations, management functions and elsewhere. This is smart business, but then we let them drive down wages, and send the difference to a few at the top, without even taxing those at the top so we can use the money to make up for the circumstances this imposes on those at the bottom.

In So DID Mitt Romney Really “Create Jobs” At Staples? I looked at whether Staples really invented new jobs or really just shifted jobs from other companies to their company. Unfortunately Staples didn’t “create jobs,” it grew by putting other companies out of business, thereby shifting people into lower-paying jobs. That is the Wal-Mart model, Bain Capital model, that has taken over our economy.

Staples grew by putting local stationery stores out of business, local office supply, and other chains like Businessland out of business. All those small business owners who had local stores, making a modest small-business income, now instead are working maybe as managers at a Staples. From the post,

As Staples grew it overtook competing chains like Businessland and others. In other words, Staples took business from other, existing stores — often local retailers. Staples did not “create” jobs, it shifted office-supply jobs from local stores, etc., probably to lower-paying jobs. (The former owners of local businesses certainly were worse off from this.) They likely even lowered overall office-supply, stationery, etc. employment in the larger economy.

Low Wages?

How do these”Romney job creator” jobs stack up against other jobs? Average Staples salaries for job postings nationwide are 51% lower than average salaries for all job postings. The pay at Staples appears to be around $8-10 an hour. That’s $16-20,000 a year, certainly not enough to support a family, or even pay rent in many areas, never mind buying food. (The 2012 poverty guideline for family of four is $23,050.)

So Mitt Romney complains that the changes in our economy over the last few decades that have made most of us so much poorer are our own fault. But he concludes that government – We, the People – shouldn’t try to do something about it! He complains that government – We, the People – are really just in the way of letting it go on and make a few at the top get even richer at the expense of the rest of us.

In democracies We, the People are supposed to have a say. And WE say we want better wages, bnefits, and a piece of the pie. When democracies function, that is what happens. When the Romneys and the Bain Capitals and the Wal-Marts are able to tell us what the government’s policies should be, then things fall apart. 6 Wal-Mart heirs have more wealth now than around 1/3 of all Americans combined. Mitt Romney has an income of approx $440,000 per week.

And yes, 47% of us don’t make enough to pay income taxes.

The solution is to restore our, We the People’s, yes government’s control over these circumstances. Government is US making the decisions and big government is us making more of the decisions. And when We, the People have a say we say we want to restore the virtuous circle of prosperity: we create the fertile ground for businesses to prosper by building roads and bridges and good schools, we help them prosper by providing good courts, regulation to keep the giants from domination and to keep the components of the economy functioning smoothly, and investing in research and universities. And then when the business are doing well we ask for good jobs with good wages and benefits and working conditions, and we collect taxes to pay for the investment that keeps that virtuous circle going.

About Dave Johnson

Dave has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.